Financial Markets Authority to take over regulatory oversight of consumer credit laws as government touts 'simpler, clearer, and more workable rules'

The latest change to lending laws has passed through Parliament, the Government saying it means “simpler, clearer, and more workable” rules.

The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill passed its third reading in Parliament last week, following years of reform to the law.

Commerce Minister Cameron Brewer said the previous changes meant lending had become “harder, slower, and more frustrating than it needed to be”.

“Borrowers were put through intrusive and unnecessary checks, lenders became overly cautious, and good Kiwis were left jumping through hoops just to get a loan," Brewer said.

“These rules were meant to protect consumers. Instead, they created complexity, confusion, and cost.”

The law has faced multiple changes over recent years - changes under the last government, intended to crack down on loan sharks, initially saw strict new rules enforced for borrowers. Shortly after, the unintended consequences were investigated, with further amendments following.

The current Government announced in 2024 more reform to improve lending, which was also part of the National-ACT coalition agreement to rewrite the CCCFA “to protect vulnerable consumers without unnecessarily limiting access to credit”.

During its third reading, Brewer said the change “removes a due diligence duty and intendent personal liability for directors and for senior managers… The Bill also addresses two issues with how the CCCFA assigns liability for the costs of borrowing, in the event a lender has breached certain disclosure requirements”.

“The first issue, as this House well knows, is a historical one. The Bill backdates reforms made in 2019 to protect the market from redress that the courts consider unjust. This has no impact on the class litigation against ANZ and ASB.”

Credit regulation oversight will transfer from the Commerce Commission to the Financial Markets Authority (FMA), “bringing firms into the FMA’s licensing regime and creating a clearer, more consistent regulatory system”, Brewer said.

“We are also removing unnecessary personal liability for senior managers and directors and making consequences for certain disclosure breaches more proportionate. Accountability remains, but the rules need to be workable and fair.”

That transfer will happen next month, with Commerce Commission chief executive Sarah Bartlett saying there would be a “smooth and well‑governed transition so that information is transferred safely and appropriately, with strong protections in place for data integrity and privacy”.

FMA executive director Clare Bolingford said it was not just a change in oversight - “it’s a move toward a more connected and coordinated approach to regulating financial market conduct”.

“By aligning credit regulation with broader financial services, we’re creating a framework that better supports responsible lending and consumer protection.”

“Introducing a licensing regime for lenders will give the FMA more ways to monitor and supervise lending activity, and will provide a wider set of regulatory tools to support effective oversight.

Labour commerce spokesperson Arena Williams said the changes did not improve things for consumers, “it sends all the wrong signals, and this government should hang its head in shame”.

During the Bill's second reading, Williams said: “We need to show consumers that when they are owed money by their banks, or they are owed money by their insurers, or someone has charged them more money than they should have, that the Government will enforce the law in their favour, and that everyone is viewed equally in the eyes of the law”.

“The most important thing for economic development in a country like ours is the rule of law and people’s faith in the system. This is a bill that undermines that. That is why it’s so wrong.”